United States

For strategic security and diplomatic support, Israel has depended
almost totally upon the United States. Since the establishment of the
state in 1948, the United States has expressed its commitment to
Israel's security and well-being and has devoted a considerable share of
its world-wide economic and security assistance to Israel. Large-scale
American military and economic assistance began during the October 1973
War, with a massive American airlift of vital military matériel to
Israel at the height of the war. From 1948 through 1985, the United
States provided Israel with US$10 billion in economic assistance and
US$21 billion in military assistance, 60 percent of which was in the
form of grants. From 1986 through 1988, total United States economic and
military assistance to Israel averaged more than US$3 billion a year,
making Israel the largest recipient of United States aid. Of the annual
total, about US$1.8 billion was in Foreign Military Sales credits, and
about US$1.2 billion was in economic assistance.

During the administration of President Ronald Reagan, the United
States-Israeli relationship was significantly upgraded, with Israel
becoming a strategic partner and de facto ally. A number of bilateral
arrangements solidified this special relationship. In November 1983, the
United States and Israel established a Joint Political-Military Group to
coordinate military exercises and security planning between the two
countries, as well as to position United States military equipment in
Israel for use by American forces in the event of a crisis. In 1984
Israel and the United States concluded the United States-Israel Free
Trade Area Agreement to provide tariff-free access to American and
Israeli goods. In 1985 the two countries established a Joint Economic
Development Group to help Israel solve its economic problems; in 1986
they created a Joint Security Assistance Group to discuss aid issues.
Also in 1986, Israel began participating in research and development
programs relating to the United States Strategic Defense Initiative. In
January 1987, the United States designated Israel a major non-NATO ally,
with status similar to that of Australia and Japan. Two months later,
Israel agreed to the construction of a Voice of America relay
transmitter on its soil to broadcast programs to the Soviet Union. In
December 1987, Israel signed a memorandum of understanding allowing it
to bid on United States defense contracts on the same basis as NATO
countries. Finally, the two countries signed a memorandum of agreement
in April 1988 formalizing existing arrangements for mutually beneficial
United States-Israel technology transfers.

Israel has also cooperated with the United States on a number of
clandestine operations. It acted as a secret channel for United States
arms sales to Iran in 1985 and 1986, and during the same period it
cooperated with the United States in Central America.

The United States-Israeli relationship, however, has not been free of
friction. The United States expressed indignation with Israel over an
espionage operation involving Jonathan Jay Pollard, a United States Navy
employee who was sentenced to life imprisonment for selling hundreds of
vital intelligence documents to Israel. During the affair, Israeli
government and diplomatic personnel in Washington served as Pollard's
control officers. Nevertheless, United States government agencies
continued to maintain a close relationship with Israel in sensitive
areas such as military cooperation, intelligence sharing, and joint
weapons research.

The main area of friction between the United States and Israel has
concerned Washington's efforts to balance its special ties to Jerusalem
with its overall Middle Eastern interests and the need to negotiate an
end to the Arab-Israeli conflict, in which the United States has played
a major mediating role. In 1948 the United States hoped that peace could
be achieved between Israel and the Arab states, but this expectation was
quickly dashed when Arab nations refused to recognize Israel's
independence. American hopes were dashed again when in 1951 Jordan's
King Abdullah, with whom some form of settlement seemed possible, was
assassinated and in 1953 when the Johnston Plan, a proposal for
neighboring states to share the water of the Jordan River, was rejected.

The June 1967 War provided a major opportunity for the United States
to serve as a mediator in the conflict; working with Israel and the Arab
states the United States persuaded the United Nations (UN) Security
Council to pass Resolution 242 of November 22, 1967. The resolution was
designed to serve as the basis for a peace settlement involving an
Israeli withdrawal from territories occupied in the June 1967 War in
exchange for peace and Arab recognition of Israel's right to exist. Many
disputes over the correct interpretation of a clause concerning an
Israeli withdrawal followed the passage of the UN resolution, which was
accepted by Israel. The resolution lacked any explicit provision for
direct negotiations between the parties. Although the Arab states and
the Palestinians did not accept the resolution, it has remained the
basis of United States policy regarding the Arab-Israeli conflict.

In December 1969, the Rogers Plan, named after United States
Secretary of State William P. Rogers, although unsuccessful in producing
peace negotiations, succeeded in ending the War of Attrition between
Israel and Egypt that followed the June 1967 War and established a
cease-fire along the Suez Canal. In 1971 United States Assistant
Secretary of State Joseph P. Sisco proposed an "interim Suez Canal
agreement" to bring about a limited Israeli withdrawal from the
canal, hoping that such an action would lead to a peace settlement. The
proposal failed when neither Israel nor Egypt would agree to the other's
conditions.

In October 1973, at the height of the Arab-Israeli war, United
States-Soviet negotiations paved the way for UN Security Council
Resolution 338. In addition to calling for an immediate cease-fire and
opening negotiations aimed at implementing Resolution 242, this
resolution inserted a requirement that future talk be conducted
"between the parties concerned," that is, between the Arab and
the Israelis themselves.

In September 1975, United States secretary of state Henry Kissinger's
"shuttle diplomacy" achieved the Second Sinai Disengagement
Agreement between Israel and Egypt, laying the groundwork for later
negotiations between the two nations. The United States also pledged, as
part of a memorandum of understanding with Israel, not to negotiate with
the PLO until it was prepared to recognize Israel's right to exist and
to renounce terrorism.

Another major United States initiative came in 1977 when President
Jimmy Carter stressed the need to solve the Arab-Israeli conflict by
convening an international peace conference in Geneva, cochaired by the
United States and the Soviet Union. Although Egyptian President Anwar as
Sadat conducted his initiative in opening direct Egyptian-Israeli peace
talks without United States assistance, the United States played an
indispensable role in the complex and difficult negotiation process.
Negotiations ultimately led to the signing, under United States
auspices, of the September 17, 1978, Camp David Accords, as well as the
March 1979 Treaty of Peace Between Egypt and Israel. The accords
included provisions that called for granting autonomy to Palestinians in
the West Bank and the Gaza Strip through a freely elected self-governing
authority during a five-year transitional period; at the end of the
period the final status of the occupied territories was to be decided.
Carter had hoped that this process would enable the Palestinians to
fulfill their legitimate national aspirations while at the same time
safeguarding Israeli security concerns. While criticizing the Begin
government's settlement policy in the occupied territories, the Carter
administration could not prevent the intensified pace of construction of
new settlements.

Following Israel's invasion of Lebanon in early June 1982, on
September 1, 1982, President Reagan outlined what came to be called the
Reagan Plan. This plan upheld the goals of the Camp David Accords
regarding autonomy for the Palestinians of the West Bank and the Gaza
Strip and disapproved of Israel's establishment of any new settlements
in these areas. It further proposed that at the end of a transitional
period, the best form of government for the West Bank and the Gaza Strip
would be self-government by the resident Palestinian population in
association with Jordan. Under the plan, Israel would be obliged to
withdraw from the occupied territories in exchange for peace, and the
city of Jerusalem would remain undivided; its final status would be
decided through negotiations. The plan rejected the creation of an
independent Palestinian state. Although Labor leader Peres expressed
support for the plan, Prime Minister Menachem Begin and the Likud
opposed it, as did the PLO and the Arab states. The plan was
subsequently shelved.

The United States nevertheless continued its efforts to facilitate
Arab-Israeli peace. In March 1987, the United States undertook intensive
diplomatic negotiations with Jordan and Israel to achieve agreement on
holding an international peace conference, but differences over
Palestinian representation created obstacles. In Israel, Likud prime
minister Shamir and Labor minister of foreign affairs Peres were at
odds, with Shamir rejecting an international conference and Peres
accepting it. Peres and Labor Party minister of defense Rabin reportedly
held talks with Jordan's King Hussein, who wanted the conference to
include the five permanent members of the UN Security Council, as well
as Israel, the Arab states, and the PLO. The Reagan administration, on
the other hand, was reluctant to invite the Soviet Union to participate
in the diplomatic process. The administration insisted that any
prospective conference adjourn speedily and then take the form of direct
talks between Israel and Jordan. The administration also insisted that
the conference have no power to veto any agreement between Israel and
Jordan.

A major difficulty involved the nature of Palestinian representation
at a conference. A Soviet-Syrian communiqué repeated the demand for PLO
participation, which Israel flatly rejected. The United States asserted
that, as the basis for any PLO participation, the PLO must accept UN
Resolutions 242 and 338 with their implied recognition of Israel's right
to exist. Both the PLO mainstream and its radical wings were unwilling
to agree to this demand. The Palestinian uprising (intifadah)
in the West Bank and the Gaza Strip began in December 1987. In February
1988, Secretary of State George Shultz visited Israel, Egypt, Jordan,
and Syria; in a statement issued in Jerusalem he called for Palestinian
participation, as part of a Jordanian/Palestinian delegation, in an
international peace conference. The PLO rejected this initiative. The
United States proposal called for a comprehensive peace providing for
the security of all states in the region and for fulfillment of the
legitimate rights of the Palestinian people. The proposal consisted of
an "integrated whole" and included the following negotiating
framework: "early negotiations between Israel and each of its
neighbors willing to do so," with the door "specifically open
for Syrian participation"; "bilateral negotiations . . . based
on United Nations Security Council Resolutions 242 and 338 in all their
parts"; "the parties to each bilateral negotiation" to
determine "the procedure and agenda of the negotiation";
"negotiations between an Israeli and a Jordanian/Palestinian
delegation on arrangements for a transitional period for the West Bank
and Gaza," with the objective of completing "these talks
within six months"; and "final status negotiations"
beginning "on a date certain seven months after the start of
transitional talks," with the objective of completing the talks
"within a year."

On March 26, 1988, Shultz met with two members of the Palestine
National Council (PNC), which represents Palestinians outside Israel
various political and guerrilla groups with the PLO, and associated
youth, student, women's and professional bodies. According to a PLO
spokesman, the PNC members, Professors Ibrahim Abu Lughod and Edward
Said, both Arab Americans, were authorized by Yasir Arafat to speak to
Shultz, and they later reported directly to the PLO leader about their
talks. Little resulted from this meeting, however, and Shultz found no
authoritative party willing to come to the conference table.

The United States once again involved itself in the peace process to
break the stalemate among the Arab states, the Palestinians, and Israel
following King Hussein's declaration on July 31, 1988, that he was
severing most of Jordan's administrative and legal ties with the West
Bank, thus throwing the future of the West Bank onto the PLO's
shoulders. PLO chairman Yasir Arafat thereby gained new international
status, but Shultz barred him from entering the United States to address
the UN General Assembly in early December because of Arafat's and the
PLO's involvement in terrorist activities. When Arafat, following his
December 14 address to a special session of the UN General Assembly in
Geneva, met American conditions by recognizing Israel's right to exist
in "peace and security," accepted UN Resolutions 242 and 338,
and renounced "all forms of terrorism, including individual, group
and state terrorism," the United States reversed its thirteen-year
policy of not officially speaking to the PLO.

The Israeli National Unity Government, installed in late December,
denounced the PLO as an unsuitable negotiating partner. It did not
accept the PLO's recognition of Israel and renunciation of terrorism as
genuine.

Whether the United States-PLO talks would yield concrete results in
terms of Arab-Israeli peace making remained to be seen as of the end of
1988. Notwithstanding the possibility of future progress, the new
willingness of the United States to talk to the PLO demonstrated that,
despite the special relationship between the United States and Israel
and the many areas of mutual agreement and shared geopolitical strategic
interests, substantial differences continued to exist between the United
States and certain segments of the Israeli government. This was
especially true with regard to the Likud and its right-wing allies.